Canadian Investors Eyeing Secondary US Markets

Are Canadian investors turning toward secondary markets in the US? With multifamily no longer the darling, Anthony Cocuzzo, a partner from Deloitte’s Toronto office who leads the company’s Americas regional real estate practice, thinks so.

In part two of this exclusive interview, we caught up with Cocuzzo to get his insights on these and other issues related to Canadian investment stateside.

GlobeSt.com: Is multifamily still the darling? How do you see the appetites shifting?

Cocuzzo: No, multifamily is and was the safer play in a tumultuous market. But for a market in recovery such as the US currently is investment is flowing to opportunities with potential for higher capital appreciation and income growth, such as segments that suffered more under the crisis, such as office and retail. Multifamily has seen significant upward pressure on valuations as investment has poured into that asset class during the uncertainty of the last several years.

GlobeSt.com: Are there certain geographic areas that are a stronger focus for Canadian investors? How are Canadian investors picking their markets?

Cocuzzo: Not sure if one region stands out more than others: Large institutions are certainly more focused on core markets, such as New York, and have been for a while. But otherwise I think yield is the first filter, then evaluated against local economic fundamentals compared to long term economic performance in that region. I also think Canadian investors are more willing to look at secondary US markets—primarily the REITs—because there is more potential for upside and some secondary US markets have similar economic fundamentals to major Canadian cities.

GlobeSt.com: What trend lines are you seeing among Canadian investors?

Cocuzzo: With yields so low and REITs pulling back, the push is on for other markets to place capital.